Chan, Sok Gee and Abd Karim, Mohd Zaini and Burton, Bruce and Aktan, Bora (2014) Efficiency and risk in commercial banking: Empirical evidence from East Asian countries. The European Journal of Finance, 20 (12). pp. 1114-1132. ISSN 1351-847X

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Abstract

This paper analyses the effects of off-balance sheet (OBS) activities and various types of risks on the cost and profit efficiencies of banks in seven East Asian countries between 2001 and 2008. Cost and profit efficiency scores are estimated using the data envelopment analysis approach. The results of this analysis are then used to identify the impact of OBS activities and risk exposures on cost and profit efficiencies using a Tobit regression.Bank insolvency risk (as measured by z-scores) is positively related to profit efficiency, while interest sensitivity, size, equity to total assets and OBS exposures all impact on cost efficiency.The analysis of the impact of input and output slacks illustrates that in around 1 in 5 cases banks’ cost efficiency can be improved by adjusting the former variables, whereas in only around 1 in 100 cases a similar outcome is possible for profit efficiency.

Item Type:	Article
Uncontrolled Keywords:	bank efficiency; other depository institutions; micro finance institutions; mortgages; model construction and estimation; government policy and regulation
Subjects:	H Social Sciences > HG Finance
Divisions:	Tunku Puteri Intan Safinaz School of Accountancy (TISSA)
Depositing User:	Prof. Dr. Mohd Zaini Abd Karim
Date Deposited:	11 Aug 2015 01:30
Last Modified:	17 Apr 2016 08:26
URI:	https://repo.uum.edu.my/id/eprint/15098

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